Review of Anti-Avoidance Law Must Not Pre-Judge Outcome

The Government's review into the operation of the general anti-avoidance rule in the tax law must be open, consultative and not have a pre-determined outcome, The Tax Institute said today.

"The general anti-avoidance rule (or Part IVA) is an important element of Australia’s tax system and has operated to protect the integrity of the tax system for more than 30 years." said The Tax Institute's President, Ken Schurgott.

"Most taxpayers seek to stay on the right side of the law and do not engage in tax avoidance behaviour, however, The Tax Institute supports efforts to tackle tax-avoidance and protect the integrity of the tax system. Part IVA is an integral part of the system to be deployed when taxpayers seek results outside the intended policy of the law."

"Part IVA is not by any means broken, but today’s announcement by the Government of a review into how effectively it is meeting its intended policy outcome, must be conducted appropriately."

Despite announcing a two-stage consultation process, the Government seems to have already made up its mind that legislative changes will be required.

"It is ludicrous to claim that consultation will occur, when one of the possible outcomes of that consultation is ruled out at the very beginning - the possibility that no change is required."

"How can the Government say, hand-on-heart, that it will consult extensively, when it has already decided there will be legislative change in the second half of this year?"

"Any ill-conceived and potentially unnecessary reforms, including in response to recent court cases are destined to result in further uncertainty, increase compliance costs and possibly act as a deterrent to foreign investment."

Great care and consideration must be applied to an open and truly consultative review.